# Loyola College B.Com Corporate & Secretaryship Nov 2010 Cost Accounting Question Paper PDF Download

LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – CORPORATE SEC.

FIFTH SEMESTER – NOVEMBER 2010

# BC 5501/CR 5501 – COST ACCOUNTING

Date : 01-11-10                     Dept. No.                                        Max. : 100 Marks

Time : 9:00 – 12:00

SECTION – A

Answer ALL the questions:                                                                                              (10 x 2 = 20 marks)

1. Define Cost Accounting.
2. a) The method of costing used in a refinery is —————.
3. b) Cost Accounting records both monetary and ————– units.
4. Prepare a chart showing the different elements of cost.
5. From the following calculate the cost of goods sold:  Cost of production `. 1,83,500;

Opening stock of finished goods `71,500; Closing stock of finished goods `.42,000.

1.   A publishing house purchases 10,000units of a particular item per year at a unit cost

of ` 40.  The ordering cost per order is Rs.100 and the inventory carrying cost is 25%

1. The worker completes a job in a certain number of hours. The standard time allowed

for the job is 8 hrs and the hourly rate of wages is` 10. The worker earns at the 50%

rate a bonus of ` 20 under Halsey plan. Ascertain his total wages under the Rowan

1.    What do you mean by a ‘Machine Hour Rate’?
2. What is Idle time
3. Mention the bases of apportionment of the following expenses of departments:
4. a) Plant depreciation b) Lighting  c) Power    d)  Consumable stores
5.   Record the following transaction in stores ledger, price the issues at weighted average

rate:  200 units received at` 2.00 per unit on 2nd September, 300 units received at

` 2.40 per unit during 15th September and 250 units issued on 20th September.

SECTION B             ANSWER ANY FIVE                                                                                     (5 x 8 =40)

1. “While Financial Accounting is external, Cost Accounting is internal to the business”-

Explain this statement by bringing out the difference between Cost and Financial

Accounting.

1. Discuss the Secondary distribution of Overheads with illustrations.
2. Write short notes on a) Retention money b) Escalation clause c) Work in progress d) Target

costing.

1. A) Compute the (i) re-order level ; (ii) minimum level ; (iii) maximum level ; and (5)

(iv) average stock level for components A and B based on the following data:

Components

A                                B

Maximum consumption per week (in units)                250                              200

Average consumption per week (in units)                   150                              100

Minimum consumption per week (in units)                 100                              50

Re-order period (in weeks)                                          6 to 10                         5 to 9

Re-order quantity (in units)                                         500                              700

1. B) Discuss the methods of pricing issue of materials.                                      (3)

1. From the following figures prepare a Reconciliation Statement:

`

Net loss as per costing records                                                            1,72,400

Works overhead under-recovered in costing                                           3,120

Depreciation charged in financial records                                             11,200

Depreciation recovered in costing                                                         12,500

Interest received not included in costing                                                 8,000

Obsolescence loss charged in financial records                                       5,700

Income-tax provided in financial books                                                40,300

Bank interest credited in financial books                                                   750

Stores adjustments (credit) in financial books                                            475

Value of opening stock in : Cost Accounts                                           52,600

Financial Accounts                                                54,000

Value of closing stock in : Cost Accounts                                             52,000

Financial Accounts                                                49,600

Interest charged in cost accounts but not in financial accounts              6,000

Preliminary expenses written off in financial accounts                              800

Provision for doubtful debts in financial accounts                                     150

1. Construction Ltd. Is engaged on two contracts A and B during the year.

The following particulars are obtained at the year end (Dec. 31) :

Contract A                             Contract B

Date of Commencement                         April 1                                 September 1

`.                                 `.

Contract price                                     6,00,000                                  5,00,000

Materials issued                                  1,60,000                                     60,000

Materials returned                                     4,000                                     2,000

Materials at site (Dec. 31)                       22,000                                     8,000

Direct Labour                                      1,50,000                                     42,000

Site Expenses                                         66,000                                     35,000

Establishment Expenses                         25,000                                       7,000

Plant installed at site                              80,000                                     70,000

Value of plant (Dec. 31)                        65,000                                     64,000

Cost of contract not yet certified          23,000                                     10,000

Value of contract certified                  4,20,000                                  1,35,000

Cash received from contractee           3,78,000                                  1,25,000

Architect’s Fees                                       2,000                                       1,000

During the period materials amounting to Rs. 9,000 have been transferred from contract A to contract B. you are required to show : (a) Contract accounts, (b) Contractees’ accounts, and (c) Extract from Balance Sheet as on December 31, clearly showing the calculation of work- in-progress.

1. A) From the following details of stores receipts and issues of material in a manufacturing

unit, prepare the Stock ledger using LIFO method.                                                            (5)

April 1 Opening Stock 2000 units @ ` 5.00 each

3   Issued 1,500 units to production

4   Received 4,500 units @ ` 6.00 each

8   Issued 1,600 units to production

1. Returned to stores 100 units by production department (from the issue of April 3)

16   Received 2,400 units @ ` 6.50 each

19   Returned to supplier 200 units out of the quantity received on April 4th.

20   Received 1,000 units @ ` 7.00 each

24   Issued to production 2,100 units

27   Received 1,200 units @ ` 7.50 each

29   Issued to production 2,800 units

1. B) Discuss the relative merits and demerits of two of the main methods of remunerating

labour.                                                                                                                                         (3)

1. Jaidka owns fleet of taxi and the following information is available from the records

maintained by him :

Number of taxis                                                                                 10

Cost of each taxi                                                                     `20,000

Salary of manager                                                                   `600 p.m.

Salary of accountant                                                               ` 500 p.m.

Salary of cleaner                                                                     `. 200 p.m.

Salary of mechanic                                                                  `400 p.m.

Garage rent                                                                             ` 600 p.m.

Annual tax                                                                              `600 per taxi

Driver’s salary                                                                         `200 p.m. per taxi

Annual repair                                                                          `1,000 per taxi

Total life of a taxi is about 2,00,00 kms. A taxi runs in all 3,000 kms. in a month of which 30% it runs empty. Petrol consumption is 1 litre for 10 kms. @ `1.80 per litre. Oil and other sundries are ` 5.00 per 100 kms.

Calculate the cost of running a taxi per km.

SECTION-C

ANSWER ANY TWO                                                                                                         ( 2 x 20 = 40 marks)

1. Modern Manufacture Ltd., have three production departments P1, P2, P3 and two Service

Departments S1 and S2, the details pertaining to which are as under :

P1                     P2                     P3                     S1                     S2

Direct wages (`)                    3,000                 2,000              3,000                1,500               195

Working Hours                     3,070                 4,475              2,419                   –                       –

Value of Machines (`)     60,000                  80,000         1,00,000                5,000            5,000

H.P. of Machines                       60                      30                   50                     10                 –

Light points                                10                      15                   20                     10                   5

Floor Space (sq. ft.)               2,000                2,500              3,000                2,000               500

The following figure extracted from the accounting records are relevant :

Rent and Rates `5,000, General Lighting `600, Indirect Wages `1,939 ;     Power `1,500 ; Depreciation on Machines `10,000 and Sundries ` 9,695.

The expenses of the Services Departments are allocated as under :

P1                           P                     P­3                           1                           S2

S1                                           20%                 30%                 40%                 –                       10%

S2                                       40%                 20%                 30%                 10%                 –

Find out the total cost of product ‘X’ which is processed for manufacture in Department P1, P2 and P3 for 4,5 and 3 hours respectively, given that its Direct Material Cost is `50 and Direct Labour Cost ` 30.

20)       Product B passes through three processes before it is transferred to finished stock. The following information is obtained for the month of March :

Details                                                             Process                                   `Finished Stock

I                       II                     III

`                      `                     `                                `

Opening Stock                                      5,000               8,000             10,000                         20,000

Direct Material                        40,000             12,000             15,000                         –

Direct Wages                          35,000             40,000             35,000                         –

Production Overheads                        20,000             24,000             20,000                         –

Closing Stock                          10,000               4,000             15,000                         30,000

Profit % on Transfer price       25%                 20%                 10%                             –

(to next process)

Inter-process Profit for

Opening  Stock           –                         1,395               2,690                         6,534

Stock in process accounts are valued at Prime cost and finished stock has been valued at the price at which it is received from Process III. Sales during the period were Rs. 4,00,000.

Prepare and compute :

• Process cost accounts showing profit element at each stage ;
• Actual realized profit ; and
• Stock valuation for Balance Sheet purpose.

21)       Following information has been obtained from the records of a Manufacturing Company :

1-1-2001                                  31-12-2001

`                                    `

Stock of raw materials                                                  40,000                                      50,000

Stock of finished goods                                              100,000                                   1,50,000

Stock of work- in-progress                                           10,000                                      14,000

`

Indirect Labour                                               50,000

Lubricants                                                       10,000

Insurance on Plant                                            3,000

Purchase of Raw Materials                          4,00,000

Sales Commission                                           60,000

Salaries of Salesmen                                     100,000

Carriage Outward                                           20,000

Power                                                              30,000

Direct Labour                                                3,00,000

Depreciation on Machinery                             50,000

Factory Rent                                                   60,000

Property Tax on Factory Building                  11,000

Sales                                                            12,00,000

Prepare a Statement of Cost and Profit showing

• Cost of Production ;
• Cost of Goods Sold ;
• Cost of Sales ; And
• Profit

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